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Dr. Filemon C. Aguilar Memorial College of Las Piñas City *

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2460

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Finance

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Nov 24, 2024

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pdf

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2

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12/12/23, 11:22 PM Chapter 8 Post-Class Homework https://www.ameengage.com/mod/quiz/review.php?attempt=4745462&cmid=1260536&page=10 1/2 English (en) English (en) Français - Canada (fr_ca) Dashboard / My courses / [Seneca 09/2023] HTM440NHA - Nardi / CHAPTER 8 - Capital Budgeting and Investment Decisions / Chapter 8 Post-Class Homework Question 11 Partially correct Mark 1.00 out of 3.00 Take me to the text Richard Ramirez is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $16,000. In order to make the purchase, Richard Ramirez needs to obtain a loan from the bank at an interest rate of 3%. The bank is only willing to offer Richard Ramirez $16,000. The following table outlines the expected net cash flows from each investment. Year ABC ZYX 1 $1,000 $7,800 2 $1,900 $7,500 3 $3,300 $3,300 4 $6,900 $1,800 5 $8,100 $800 Total $21,200 $21,200 Based on the NPV method, which investment should Richard Ramirez purchase? Do not enter dollar signs or commas in the input boxes. Use the negative sign for a negative NPV. Use the PV tables in the appendix of the textbook. Round your answers to the nearest whole number. NPV of Investment ABC: $ NPV of Investment ZXY: $ Better Investment: ZYX Explanation NPV of Investment ABC: NPV = -16,000 + 1,000*0.9709 + 1,900*0.9426 + 3,300*0.9151 + 6,900*0.8885 + 8,100*0.8626 = $2,899.00 NPV of Investment ZXY: NPV = -16,000 + 7,800*0.9709 + 7,500*0.9426 + 3,300*0.9151 + 1,800*0.8885 + 800*0.8626 = $3,952.00 Better Investment: = ZYX Partially correct Marks for this submission: 1.00/3.00.
12/12/23, 11:22 PM Chapter 8 Post-Class Homework https://www.ameengage.com/mod/quiz/review.php?attempt=4745462&cmid=1260536&page=10 2/2 Français (fr)
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